Before opening a high risk merchant account, it is extremely important to have a legal business entity. One of the major mistakes done by the merchants is that they apply for traditional merchant accounts without knowing the fact that their business is at high risk. A payment provider can consider a business to be at risk under the following conditions:
- Services that are offered might be related to health and safety
- High employee turnover
- The business might be a new one with history of lower credit card processing
- Huge number of refunds and returns
- Unattractive credit history
- Services that are offered are based on subscription
- The number of years the business has been in the market
- High fraud rates in your industry
It is nearly impossible to find a payment processor who is willing to give you a merchant account at affordable prices. To make things easier for you, below mentioned are few steps that will help you to set up your merchant account very easily.
- Look for the best merchant service providers– The first thing is to look for the best merchant service providers in the market. Some providers offer great services at lower rates which mean that they do not provide merchant accounts for high risk business. Their rejection to provide a merchant account is the very first reason why they agree to give out such low rates. Even if these providers allow you to set up a high risk merchant account, they will force you to sign demanding contracts or may charge you excessively. So it is important to look for a reliable provider that offers high risk merchant accounts at an affordable cost.
- Be aware of the cost– It is an obvious fact that high risk businesses will be charged with higher prices because of the risks associated with it. The account fees will be charged in accordance with the services you require and for every transaction, 2 to 5% will be charged. Be aware of this and do not expect to get very low rates from the processors. Never reject the best service for your business because everywhere the prices will be high.
- Check out the prices offered– Do not expect the processors to give any rates or fees straightforwardly because setting up a merchant account is not an easy job. Usually, there is an involvement of third parties who will first offer the solutions for high risk account setups. So the rates have to be negotiated for grabbing the best deal. Usually, two types of costs have to be paid- one is the processing fee and the other one is the account fees.
- Setting up the account– After selecting the merchant and the rates, the next step is to apply for a merchant account. Important documents are needed for the same- Application form, voided check, Articles of information, bank statements for business, IRS Form SS4, Financial statement of your business, and statements of processing.
Finally, after the verification of the above mentioned documents, the contracts are signed between the payment provider and the merchant. It is always a good idea to have contracts on month to month basis. Once the contract is finalised, you can get ready to take the business to a new level.
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